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Russell launches three international equity “factor” ETFs

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Russell Investments has launched its first international equity factor exchange-traded funds (ETFs), designed to provide investors with focused exposure to fundamental risk factors within their portfolio’s international equity allocation. The three new factor ETFs, which listed on NYSE Arca, focus on some of the same factors as the existing set of 10 domestic factor ETFs: low beta, low volatility and high momentum.

"Russell now offers a comprehensive global family of factor-based ETFs, providing investors with a readily accessible way to gain exposure to low volatility, low beta and high momentum factors within a portfolio that covers US large cap, US small cap and ex-US large cap markets," says James Polisson (pictured), managing director of Russell’s global ETF business. "The addition of these international equity factor ETFs is particularly timely as investors may be starting to look toward year-end portfolio rebalancing."

The global series of low beta, low volatility and high momentum ETFs combine Russell’s expertise in investment management, portfolio construction and index methodology with Axioma’s expertise in risk analytics and portfolio optimisation. Each newly launched Russell factor ETF is constructed with an underlying Russell-Axioma Developed ex-US Large Cap Factor Index, each of which draws from the comprehensive Russell Developed ex-US Large Cap Index. The new international Russell-Axioma Factor Indexes, launched last week, are reconstituted monthly to help maintain their focus on each specific factor.

"The Russell-Axioma approach when developing these products was to seek true factor purity in the returns, not just factor exposure," says Greg Friedman, managing director of Russell’s global ETF product group. "Investors may benefit from understanding their vulnerability to certain risk factors, and targeting these factors can provide them with a more focused portfolio and help manage unintended risks."

The three newly launched Russell Developed ex-U.S factor ETFs have a net expense ratio of 0.25%, while the five US large cap Russell 1000(R) factor ETFs have a net expense ratio of 0.20% and the five US small cap Russell 2000(R) factor ETFs have a net expense ratio of 0.30%.

 

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